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Where Do Hedge Funds Stand On Stericycle Inc (SRCL)?

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Is Stericycle Inc (NASDAQ:SRCL) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Stericycle Inc (NASDAQ:SRCL) was in 24 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. SRCL investors should be aware of a decrease in hedge fund interest recently. There were 25 hedge funds in our database with SRCL holdings at the end of December. Our calculations also showed that SRCL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the 21st century investor’s toolkit there are numerous metrics shareholders can use to assess their stock investments. A duo of the less utilized metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the broader indices by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

John Rogers’ Top 10 Stock Picks
John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to go over the new hedge fund action surrounding Stericycle Inc (NASDAQ:SRCL).

Do Hedge Funds Think SRCL Is A Good Stock To Buy Now?

At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SRCL over the last 23 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, Ariel Investments held the most valuable stake in Stericycle Inc (NASDAQ:SRCL), which was worth $248.7 million at the end of the fourth quarter. On the second spot was Southpoint Capital Advisors which amassed $202.5 million worth of shares. Diamond Hill Capital, Markel Gayner Asset Management, and Silver Heights Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Silver Heights Capital Management allocated the biggest weight to Stericycle Inc (NASDAQ:SRCL), around 12.8% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, dishing out 3.37 percent of its 13F equity portfolio to SRCL.

Due to the fact that Stericycle Inc (NASDAQ:SRCL) has faced a decline in interest from hedge fund managers, we can see that there lies a certain "tier" of fund managers who were dropping their entire stakes heading into Q2. It's worth mentioning that David Cohen and Harold Levy's Iridian Asset Management dropped the biggest stake of all the hedgies watched by Insider Monkey, comprising an estimated $76.1 million in stock, and Andrew Dalrymple and Barry McCorkell's Aubrey Capital Management was right behind this move, as the fund dropped about $4.9 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into Q2.

Let's now take a look at hedge fund activity in other stocks similar to Stericycle Inc (NASDAQ:SRCL). We will take a look at The Timken Company (NYSE:TKR), nCino, Inc. (NASDAQ:NCNO), BJ's Wholesale Club Holdings, Inc. (NYSE:BJ), Globus Medical Inc (NYSE:GMED), Harley-Davidson, Inc. (NYSE:HOG), Emcor Group Inc (NYSE:EME), and MP Materials Corp. (NYSE:MP). All of these stocks' market caps are closest to SRCL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TKR,23,225807,-11 NCNO,21,342756,-7 BJ,14,135957,-11 GMED,28,193769,-6 HOG,28,822936,-7 EME,20,166658,-5 MP,29,2624120,-3 Average,23.3,644572,-7.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $645 million. That figure was $649 million in SRCL's case. MP Materials Corp. (NYSE:MP) is the most popular stock in this table. On the other hand BJ's Wholesale Club Holdings, Inc. (NYSE:BJ) is the least popular one with only 14 bullish hedge fund positions. Stericycle Inc (NASDAQ:SRCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SRCL is 58.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately SRCL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SRCL were disappointed as the stock returned 2.9% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.